Noah Addis/The Star-LedgerNew Jersey State Comptroller Matthew BoxerCAMDEN -- City officials badly mismanaged a contract with a water company, costing taxpayers millions, a New Jersey state audit released today said.

The report from state Comptroller Matthew Boxer said millions of dollars in payments were made to United Water LLC without proper supporting documentation. It also said United Water made incorrect meter readings, and auditors found problems with 20 percent of the city's fire hydrants.

The report said some water tanks were corroded or not properly screened to keep out small animals and insects and that both conditions could have posed health threats.

The report said the city's water quality now meets minimum safety standards.

The city is seeking to recover nearly $29 million from the water company.

Harrington Park-based United Water said in a written response to the audit that it has improved Camden's water quality and been a good citizen. It blames the city for several of the problems.

Boxer said there was plenty of blame to go around.

"The ultimate message of the audit is this: If a municipality decides to outsource a basic service such as providing water, it needs to understand that its responsibilities do not end with the awarding of the contract," he said. "The City of Camden had an obligation in this case to safeguard the public's taxpayer dollars and it failed to do so."

The comptroller's office began the six-month audit after receiving a tip from the state Treasury Department over fees the water company charged to the city.